interim report january-SEPTEMBER 20193 Interim report January–September 2019 Vitrolife AB (publ),...

interim report january-SEPTEMBER 2019Vitrolife AB (publ)

Vitrolife is an international medical device Group. Vitrolife develops, produces and markets products for assisted reproduction.

Vitrolife has approximately 400 employees and the company’s products are sold in approximately 110 markets. The company is headquartered in Gothenburg, Sweden, and there are also offices in Australia, Belgium, China, Denmark, France, Germany, Italy, Japan, United Kingdom and USA. The Vitrolife share is listed on NASDAQ Stockholm.

2 Interim report January–September 2019 Vitrolife AB (publ), corp. id. no. 556354-3452

Continued profitable growth

Third quarter• Sales amounted to SEK 378 (284) million,

corresponding to an increase of 33 percent in SEK. Sales increased by 27 percent in local currency whereof 15 percent comprised organic growth.

• Operating income before depreciation and amortisation (EBITDA) amounted to SEK 155 (121) million, corresponding to a margin of 41 (43) percent.Fluctuations in exchange rates positively impacted EBITDA by SEK 9 million.

• Net income amounted to SEK 107 (75) million, which gave earnings per share of SEK 0.98 (0.69).

January - September• Sales amounted to SEK 1 071 (831) million,

corresponding to an increase of 29 percent in SEK. Sales increased by 23 percent in local currency whereof 12 percent comprised organic growth.

• Operating income before depreciation and amortisation (EBITDA) amounted to SEK 428 (343) million, corresponding to a margin of 40 (41) percent.Fluctuations in exchange rates positively impacted EBITDA by SEK 30 million.

• Net income amounted to SEK 287 (227) million, which gave earnings per share of SEK 2.64 (2.08).

• Market approval for EmbryoScope+ in China.

• Acquisition and collaboration agreement regarding technology for embryo assessment using artificial intelligence. The initial purchase price amounted to SEK 56 million.

• Acquisition of the business of Parallabs Ltd. The initial purchase price amounted to SEK 24 million.

Vitrolife's financial objectivesVitrolife’s Board considers that Vitrolife should have a strong capital base in order to enable continued high growth, both organically and through acquisitions. The company’s net debt in relation to EBITDA should normally not exceed 3 times. Vitrolife’s Board targets a profitable growth. The objective for Vitrolife’s growth over a three year period is an increase in sales by an average of 20 percent per year, with an operating margin before depreciation and amortisation (EBITDA) of 30 percent.

The Group's Key Figures July – September January – September Whole year

SEK millions 2019 2018 2019 2018 2018Net sales 378 284 1 071 831 1 151Net sales growth, local currency, % 27 7 23 3 5Gross margin, % 64 66 64 66 66Adjusted gross margin*, % 67 70 67 70 70Operating income before depreciation and amortisation (EBITDA) 155 121 428 343 479EBITDA margin, % 41 43 40 41 42Net income 107 75 287 227 311Net debt / Rolling 12 month EBITDA -1.1 -1.1 -1.1 -1.1 -1.0

Earnings per share**, SEK 0.98 0.69 2.64 2.08 2.85Share price on closing day, SEK 161.00 130.46 161.00 130.46 147.00Market cap at closing day 17 477 14 162 17 477 14 162 15 957

Changes in net salesOrganic growth in local currency, % 15 7 12 3 5Acquired growth, % 12 - 11 - -Currency effects, % 6 8 6 4 5Total growth, % 33 15 29 7 10

* Gross margin excluding amortisation of acquisition-related intangible assets** Before and after dilution, recalculated with regard to the 5:1 share split carried out in May 2018.For definitions, see page 17


CEO’s comments Sales during the quarter amounted to SEK 378 million, corresponding to an increase of 27 percent in local currency. Organic growth amounted to 15 percent and the acquired growth in the Genomics business unit contributed 12 percent. We are delighted that all market regions and business units displayed growth during the quarter.

The Japan and Pacific region presented a very strong quarter, with sales growth of 69 percent in local currency. The first newly launched EmbryoScope Flex time-lapse incubators, with capacity for 24 patients, were installed in Japan during the quarter and made a positive contribution to growth. The Time-Lapse business unit as a whole reported a strong quarter, with growth of 45 percent in local currency, which means that Time-Lapse penetration continues to increase in the world.

The Media business unit generally displayed good growth during the quarter, but reduced sales in China meant that growth was only 1 percent in local currency. Sales in China were negatively impacted by the delivery problems that arose during the second quarter with regard to some unique media products for China. During the third quarter these delivery problems were rectified and the company is now working so that the clinics will change back to Vitrolife’s products from the competing products that they have used while Vitrolife had delivery problems.

At ASRM, the largest fertility congress of the year in North America, clinical data from a multicentre randomised controlled study in Japan were presented with regard to Vitrolife’s new media products containing antioxidants. The results were very promising and demonstrated a significant increase regarding implantation and pregnancy rates for patients over 35 years of age who had used the new media compared with the control group. Product development is an important strategy for maintaining and strengthening competitiveness in the product range. The company has applied for patent protection and will now apply for market approval for the products worldwide. This is a process that is carried out in each individual market and for some markets it can take several years. At the congress the new media product for freezing unfertilised eggs was also launched in the US. We are delighted about this, as the US market for freezing unfertilised eggs is extensive and is growing rapidly.

Growth coupled with profitability has continued. As during previous quarters this year, the gross margin decreased somewhat compared with the previous year due to the fact that the Genomics business unit has a lower margin than the average for the Group. However, Genomics makes a good contribution to the Group in absolute numbers and contributed to the operating income of SEK 155 million before depreciation and amortisation, which is the highest operating income so far for a single quarter.

Looking ahead, the market outlook is essentially unchanged and Vitrolife therefore anticipates a constantly expanding market, which in monetary terms is expected to grow by 5-10 percent per year in the foreseeable future.

Thomas Axelsson

CEO


Third quarter 2019(July - September)

Collaboration agreement on Piezo techniqueDuring the quarter, Vitrolife entered into a collaboration agreement with Prime Tech to develop and exclusively market the Piezo technique for improved ICSI procedure in human IVF globally except for Japan, Thailand and Malaysia. Vitrolife will as part of the agreement initiate regulatory approval initiatives in various markets to enable future commercialization of the technology. Intracytoplasmic Sperm Injection (ICSI) is a specialised form of In Vitro Fertilisation (IVF) that is used primarily for the treatment of male-factor infertility. ICSI involves the injection of a single sperm directly into a mature egg (oocyte).

Net sales Sales amounted to SEK 378 (284) million, corresponding to an increase of 33 percent in SEK. Sales increased by 27 percent in local currency, of which 15 percent was organic growth. The acquired growth stemmed from sales related to the Genomics business unit.

Sales for the EMEA region (Europe, the Middle East and Africa) amounted to SEK 147 (113) million. Sales increased by 26 percent in local currency and were impacted by increased sales in all business units and acquired growth from Genomics. In the North- and South American region sales amounted to SEK 71 (49) million. Sales increased by 35 percent in local currency and were positively impacted by increased Media sales and by acquired growth from Genomics. Sales in the Japan and Pacific region amounted to SEK 71 (38) million. Sales increased by 69 percent in local currency and were posi-tively impacted amongst others by increased Time-Lapse sales. Sales in the Asian region increased by 4 percent in local currency and amounted to SEK 89 (84) million. Sales were positively impacted by increased sales of Time-Lapse and negatively impacted by delivery problems regarding some unique media products for China.

Sales for the Media business unit increased by 1 percent in local currency during the quarter and amounted to SEK 162 (156) million. Sales for the Disposable Devices busi-ness unit increased by 11 percent in local currency and amounted to SEK 46 (39) million. Sales for the Time-lapse business unit increased by 45 percent in local currency during the quarter and amounted to SEK 108 (69) million. Sales for the ART Equipment business unit increased during the quarter by 35 percent in local currency and amounted to SEK 19 (14) million. Sales for the Genomics business unit amounted to SEK 37 (-) million. Freight rev-enues amounted to SEK 7 (6) million.


IncomeOperating income before depreciation and amortisation (EBITDA) amounted to SEK 155 (121) million, corresponding to a margin of 41 percent (43). Fluctuations in currency had a positive impact of SEK 9 million on EBITDA. The new reporting standard IFRS 16 came into force as of January 1, 2019. This has meant that the EBITDA margin has improved by approximately 1 percentage point as a result of lease payments, such as rental agreements, now being reported as depreciation and interest expenses in the income statement and thus not being included in the EBITDA key ratio.

Gross income amounted to SEK 243 (188) million. The gross margin amounted to 64 (66) percent and was negatively impacted by the product mix amongst others as the acquired Genomics business unit has a lower gross margin than the average for the Group and positively by currency. The gross margin adjusted for amortisation of acquisition-related intangible assets amounted to 67 (70) percent for the quarter.

Selling expenses amounted to 15 (16) percent of sales and the decrease consisted primarily of economies of scale. Administrative expenses amounted to 9 (8) percent of sales and the increase consisted primarily of increased costs for variable remuneration. R&D costs amounted to 6 (5) percent of sales and the increase consisted primarily of increased product development costs. Depreciation, amortisation and write-downs of SEK 25 (17) million were charged against income. Net financial items amounted to SEK 6 (-8) million and consisted primarily of currency effects. Income before tax amounted to SEK 137 (96) million. Net income amounted to SEK 107 (75) million. Other comprehensive income amounted to SEK 17 million and consisted of positive translation effects related to net assets in foreign subsidiaries and acquisition-related intangible assets in foreign currency.

Income per segment The organisation consist of five business units and their products are sold in four geographic market organisations. Vitrolife reports the market contribution from each geographic segment. The market contribution is defined as gross income minus selling expenses per market. For more information, see note 6. The market contribution during the quarter for the EMEA region amounted to SEK 68 (55) million and was positively impacted by increased sales, the addition of the Genomics business unit and currency effects. The contribution from the North and South American region amounted to SEK 32 (25) million and was positively impacted by increased sales, the addition of the Genomics business unit and currency effects. The contribution from the Japan and Pacific region amounted to SEK 38 (18) million and was positively impacted by increased sales and currency effects. The market contribution from the Asian region amounted to SEK 50 (45) million and was positively impacted by increased sales and currency effects.

Cash flowThe cash flow from operating activities amounted to SEK 151 (86) million. The change in working capital amounted to SEK 22 (-15) million and consisted amongst other things of decreased trade receivables. Gross capital expenditure for tangible non-current assets amounted to SEK -4 (-3) million and mainly consisted of equipment. Gross capital expenditure for intangible non-current assets amounted to SEK -1 (-1) million and consisted primarily of capitalized development costs. The cash flow from financing activities was SEK - (0) million. Cash and cash equivalents at the end of the period amounted to SEK 599 (496) million. The company aims to invest its cash in hand in value-creating acquisitions.

FinancingVitrolife’s total credit facilities amounted to SEK - (50) million, of which SEK - (-) million was utilized. The equity/assets ratio was 83 (87) percent and decreased due to that IFRS 16 came into force. Net debt in relation to income for a rolling 12 months before depreciation and amortisation (EBITDA) amounted to -1.1 (-1.1) times.

Parent CompanyBusiness activities focus on Group-wide management. Income included invoicing of management fee of SEK 4 (5) million. Income after financial items for the quarter amounted to SEK 2 (14) million. Cash and cash equivalents amounted to SEK 179 (52) million and were positively impacted by the fact that a cash pool has been set up.


The period 2019(January - September)

Acquisition of embryo assessment using AI During the second quarter, Vitrolife acquired the rights to technology for the assessment of embryos based on time-lapse films using artificial intelligence (“AI”) and entered into collaboration agreements for an initial period of three years for further development of the technology. The initial purchase price related to the transfer amounted to SEK 56 million. The purchase price was paid in cash and was financed by available cash balances. In addition to the initial purchase price, additional purchase price of SEK 19 million may be paid in relation to product development targets. The purchase price has been recorded as an intangible asset. Vitrolife assess that the additional purchase price is likely to fall out and thus it has been recorded as an asset and a liability. The transaction is expected to impact EBITDA per share marginally negatively during 2019 and positively as from 2020, when the technology is expected to be commercially launched.

Acquisition of distributor ParallabsDuring the second quarter, Vitrolife acquired the busi-ness of Parallabs Ltd, its distributor in UK and Ireland for EmbryoScope time-lapse systems, and thereby strength-ened its presence in UK and Ireland. The initial purchase price amounted to SEK 24 million. The purchase price was paid in cash and was financed by available cash balances. In addition to the initial purchase price, additional purchase price of SEK 6 million may be paid in relation to sales tar-gets. The transaction is expected to be accretive to group revenue of approximately SEK 12 million for a twelve-month period and for the group contribute marginally to EBITDA. For more information, see note 4.

Net sales Sales amounted to SEK 1 071 (831) million, corresponding to an increase of 29 percent in SEK. Sales increased by 23 percent in local currency, of which 12 percent was organic growth. The acquired growth stemmed from sales related to the Genomics business unit.

Sales for the EMEA region (Europe, the Middle East and Africa) amounted to SEK 429 (367) million. Sales increased by 13 percent in local currency and were amongst others impacted by increased sales of Media and acquired growth from Genomics. In the North- and South American region sales amounted to SEK 198 (122) million. Sales increased by 49 percent in local currency and were amongst others positively impacted by increased Time-lapse sales and by acquired growth from Genomics. Sales in the Japan and Pacific region amounted to SEK 170 (127) million. Sales increased by 25 percent in local currency and

and were amongst others positively impacted by increased Media and Time-Lapse sales. Sales in the Asian region increased by 23 percent in local currency and amounted to SEK 274 (216) million. Sales were amongst others posi-tively impacted by increased sales of Time-Lapse.

Sales for the Media business unit increased by 6 percent in local currency and amounted to SEK 493 (450) million. Sales for the Disposable Devices business unit increased by 6 percent in local currency and amounted to SEK 133 (118) million. Sales for the Time-lapse business unit increased by 34 percent in local currency and amounted to SEK 287 (203) million. Sales for the ART Equipment business unit increased by 2 percent in local currency and amounted to SEK 46 (43) million. Sales for the Genomics business unit amounted to SEK 91 (-) million. Freight rev-enues amounted to SEK 21 (18) million.

IncomeOperating income before depreciation and amortisation (EBITDA) amounted to SEK 428 (343) million, corresponding to a margin of 40 percent (41). Fluctuations in currency had a positive impact of SEK 30 million on EBITDA. The new reporting standard IFRS 16 came into force as of January 1, 2019. This has meant that the EBITDA margin has improved by approximately 1 percentage point as a result of lease payments, such as rental agreements, now being reported as depreciation and interest expenses in the income statement and thus not being included in the EBITDA key ratio.

Gross income amounted to SEK 686 (547) million. The gross margin amounted to 64 (66) percent and was negatively impacted by the product mix as the acquired Genomics business unit has a lower margin than the average for the Group and positively by currency. The gross margin adjusted for amortisation of acquisition-related intangible assets amounted to 67 (70) percent.

Selling expenses amounted to 16 (16) percent of sales. Administrative expenses amounted to 9 (9) percent of sales. R&D costs amounted to 6 (6) percent of sales. Depreciation, amortisation and write-downs of SEK 71 (51) million were charged against income. Net financial items amounted to SEK 13 (-1) million and consisted primarily of currency effects. Income before tax amounted to SEK 370 (291) million. Net income amounted to SEK 287 (227) million. Other comprehensive income amounted to SEK 37 million and consisted of positive translation effects related to net assets in foreign subsidiaries and acquisition-related intangible assets in foreign currency.


Income per segment The market contribution during the period for the EMEA region amounted to SEK 198 (175) million and was positively impacted by increased sales, the addition of the Genomics business unit and currency effects. The contribution from the North and South American region amounted to SEK 82 (58) million and was positively impacted by increased sales, the addition of the Genomics business unit and currency effects. The contribution from the Japan and Pacific region amounted to SEK 89 (66) million and was positively impacted by increased sales and currency effects. The market contribution from the Asian region amounted to SEK 147 (114) million and was positively impacted by increased sales and currency effects.

Cash flowThe cash flow from operating activities amounted to SEK 285 (233) million. The change in working capital amounted to SEK -52 (-37) million. The increase consisted amongst other things of increased trade receivables and inventory as a result of increased sales and the addition of the Genomics business unit. Gross capital expenditure for tangible non-current assets amounted to SEK -14 (-12) million and mainly consisted of equipment. Gross capital expenditure for intangible non-current assets amounted to SEK -61 (-43) million, of which SEK -56 million related to the acquisition of rights to technology for assessing embryos based on time-lapse films using artificial intelligence. Gross capital expenditure included the acquisition of the business from Parallabs Ltd to the tune of SEK -24 million. Gross capital expenditure for financial assets amounted to SEK -2 (-2) million. The cash flow from financing activities was SEK -92 (-81) million and consisted of dividend to shareholders. Cash and cash equivalents at the end of the period amounted to SEK 599 (496) million. The company aims to invest its cash in hand in value-creating acquisitions.

ProspectsAs the standard of living rises in several developing coun-tries, more and more people choose to wait before theyhave children. This trend, which has existed in the West for decades, leads to a reduced chance of pregnancy, which in turn drives the fertility treatment market. The same trend is now developing in emerging countries, where the demand for this treatment is increasing rapidly. Vitrolife therefore anticipates a constantly expanding market, which in mon-etary terms is expected to grow by 5–10 percent per year in the foreseeable future.

Looking ahead, the company will continue to focus on expanding sales and broadening the product offering.

The company in brief

Business conceptVitrolife’s business concept is to develop, produce and market advanced, effective and safe products and systems for assisted reproduction.

GoalVitrolife’s goal is to be the leading provider of solutions that reduce the time to achieve a healthy baby and improve workflow efficiency and control for IVF clinics.

Strategies• Sustainable scalable global organisation focusing on

common values.

• Strengthen sales and support channels that can offer customised solutions.

• Competitive and complete portfolio with integrated and modular solutions.

• Innovative research and development and efficient supply chain and manufacturing.

• Take advantage of external growth opportunities such as collaborations and acquisitions.

Other information

Organisation and personnelDuring the period the average number of employees was 396 (361), of whom 199 (175) were women and 197 (186) were men. Of these, 151 (140) people were employed in Sweden, 89 (77) in the US, 79 (76) in Denmark and 77 (68) in the rest of the world. The number of people employed in the Group at the end of the period was 418 (387).

Information on transactions with related partiesNo transactions that have substantially affected the com-pany’s results and financial position have been carried out with related parties during the period. Fees were paid to one of the members of the Board for consultancy services over and above their work on the Board. For information on related parties, see the Annual Report for 2018, note 30.

DividendIt was decided at the Annual General Meeting on May 2 that the proposed dividend of SEK 0.85 per share would be paid out to the shareholders. Payment of the dividend took place on May 9.

Risk managementVitrolife works constantly and systematically to identify, evaluate and manage overall risks and different systems and processes. Risk analyses are performed continually


This is a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.

Financial reportsVitrolife’s interim reports are published on the company’s website,www.vitrolife.com, and are sent to shareholders who have regis-tered that they would like to have this information.

Financial calender2020-02-06: Report on operations 20192020-04-23: Interim report January - March 20202020-04-28: Annual General Meeting 20202020-07-13: Interim report January - June 20202020-11-06: Interim report January - September 2020 2021-02-10: Report on operations 2020

Review reportWe have reviewed the interim report for Vitrolife AB (publ),corporate identity number 556354-3452, for the period January1 - September 30, 2019. The Board of Directors and theCEO are responsible for the preparation and presentationof this interim report in accordance with IAS 34 and the AnnualAccounts Act. Our responsibility is to express a conclusion onthis interim report based on our review.

Scope of ReviewWe conducted our review in accordance with the InternationalStandard on Review Engagements ISRE 2410, Review ofInterim Financial Information Performed by the IndependentAuditor of the Entity. A review consists of making inquiries,primarily of persons responsible for financial and accountingmatters, and applying analytical and other review procedures.A review has a different focus and is substantially less in scope

than an audit conducted in accordance with ISA and other gener-ally accepted auditing practices. The procedures performedin a review do not enable us to obtain a level of assurancethat would make us aware of all significant matters that mightbe identified in an audit. Therefore, the conclusion expressedbased on a review does not give the same level of assurance asa conclusion expressed based on an audit.

ConclusionBased on our review, nothing has come to our attention thatcauses us to believe that the interim report is not, in all materialrespects, prepared for the Group in accordance with IAS 34and the Annual Accounts Act, and for the Parent Company inaccordance with the Annual Accounts Act.

Gothenburg, November 6, 2019

DELOITTE ABFredrik JonssonAuthorised Public Accountant

Queries should be addressed toThomas Axelsson, CEO, phone +46 31 721 80 01Mikael Engblom, CFO, phone +46 31 721 80 14

This information is information that Vitrolife AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 8.30 am CET on November 6, 2019.

with regard to the company’s normal business activities and also in connection with activities that are outside Vitrolife’s regular quality system. In this way the company can have a high rate of development and at the same time be aware of both the opportunities and risks.

The most important strategic and operative risks regarding Vitrolife’s business and field are described in detail in the Management report, in the Annual Report for 2018. These are primarily constituted by macro-economic risks, opera-tional risks and financial risks. The company’s management of risks is also described in the Corporate Governance Report in the same Annual Report. The same applies to the Group’s management of financial risks, which are described in the Annual Report for 2018, note 3. The reported risks, as they are described in the 2018 Annual Report, are assessed to be essentially unchanged.

Seasonal effectsVitrolife’s sales are affected relatively marginally by seasonal effects. There is often a downturn in orders before and dur-ing holiday periods. The reason that orders tail off before

holiday periods is that fertility clinics minimize their stock, primarily of fertility media, as these have a relatively short shelf life, so as not to risk scrapping. The third quarter has the greatest negative effect from holiday periods, as July and August are affected by holiday periods, primarily in Europe. During the first quarter sales in China are affected negatively by the Chinese New Year in January or February. During the fourth quarter sales in December are negatively affected by the Christmas and New Year holidays. All in all, total sales are usually relatively even between the first and second half of the year.

Events after the end of the periodNo events have occurred after the end of the period that significantly affect the assessment of the financial informa-tion in this report.

November 6, 2019Gothenburg, Sweden

Thomas Axelsson CEO


Consolidated income statementsJanuary – September July – September Whole year

SEK thousands Note 2019 2018 2019 2018 2018

Net sales 5,6 1 070 646 831 235 377 991 284 010 1 151 348Cost of goods sold -384 482 -284 534 -134 642 -96 153 -390 224Gross income 686 164 546 701 243 349 187 857 761 124

ComprisingAdjusted gross income 717 810 578 634 254 001 198 685 803 645Amortisation of acquisition-related intangible assets -31 646 -31 933 -10 652 -10 828 -42 521Gross income 686 164 546 701 243 349 187 857 761 124

Selling expenses -169 476 -133 077 -56 097 -44 289 -184 537Administrative expenses -93 771 -72 201 -33 865 -21 654 -99 270Research and development costs -68 689 -52 645 -23 543 -15 341 -88 457Other operating revenues 3 078 3 415 640 133 25 136Other operating expenses -360 -11 -6 -2 667 -20 081Operating income 356 946 292 182 130 478 104 039 393 915

ComprisingAdjusted operating income 388 592 324 153 141 130 114 879 436 486Amortisation of acquisition-related intangible assets -31 646 -31 971 -10 652 -10 840 -42 571Operating income 356 946 292 182 130 478 104 039 393 915

Financial income and expenses 12 626 -1 095 6 412 -7 808 4 668Income after financial items 369 572 291 087 136 890 96 231 398 583

Income taxes -82 182 -64 539 -30 091 -21 083 -87 886Net Income 287 390 226 548 106 799 75 148 310 697

Attributable toParent Company’s shareholders 286 658 225 700 106 705 75 067 309 697Non-controlling interests 732 848 94 81 1 000

Earnings per share*,**, SEK 2.64 2.08 0.98 0.69 2.85Average number of outstanding shares** 108 550 575 108 550 575 108 550 575 108 550 575 108 550 575Number of shares at closing day** 108 550 575 108 550 575 108 550 575 108 550 575 108 550 575

* Before and after dilution.** Recalculated with regard to the 5:1 share split carried out in May 2018.Depreciation, amortisation and write-downs were charged against income for the period by SEK 70,845 thousand (51,258), of which SEK 24,762 thousand (16,947) for the third quarter.

Statements of comprehensive income

January – September July – September Whole yearSEK thousands 2019 2018 2019 2018 2018

Net income 287 390 226 548 106 799 75 148 310 697

Other comprehensive incomeItems that may be reclassified to the income statementExchange rate differences 37 096 36 695 17 487 -9 305 37 824Total other comprehensive income 37 096 36 695 17 487 -9 305 37 824Total comprehensive income 324 486 263 243 124 286 65 843 348 521

Attributable to Parent Company’s shareholders 323 604 262 251 124 141 65 806 347 384Non-controlling interests 882 992 145 37 1 137


Key ratios, total GroupJanuary – September July – September Whole year

2019 2018 2019 2018 2018

Gross margin, % 64.1 65.8 64.4 66.1 66.1Adjusted gross margin, % 67.0 69.6 67.2 70.0 69.8Operating margin before depreciation and amortisation (EBITDA), % 40.0 41.3 41.1 42.6 41.6Operating margin (EBIT), % 33.3 35.2 34.5 36.6 34.2Net margin, % 26.8 27.3 28.3 26.5 27.0Equity/assets ratio, % 82.6 87.1 82.6 87.1 88.1Shareholders’ equity per share*, SEK 15.88 12.97 15.88 12.97 13.75Return on equity, % 23.1 22.2 23.1 22.2 22.2Cash flow from operating activities per share*, SEK 2.63 2.15 1.39 0.79 3.22Net debt**, SEK millions -599.0 -496.2 -599.0 -496.2 -490.8

* Recalculated with regard to the 5:1 share split carried out in May 2018.** Negative amount implies net claim.

Consolidated income statements per quarterJul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar Oct-Dec

SEK thousands 2019 2019 2019 2018 2018 2018 2018 2017

Net sales 377 991 380 731 311 924 320 113 284 010 283 231 263 994 270 847Cost of goods sold -134 642 -135 823 -114 017 -105 690 -96 153 -95 895 -92 486 -96 885Gross income 243 349 244 908 197 907 214 423 187 857 187 336 171 508 173 962

Selling expenses -56 097 -66 130 -47 249 -51 460 -44 289 -46 628 -42 160 -44 650Administrative expenses -33 865 -30 732 -29 174 -27 069 -21 654 -25 118 -25 429 -28 062Research and development costs -23 543 -24 576 -20 571 -35 812 -15 341 -18 842 -18 462 -16 950Other operating revenues and expenses 634 -534 2 620 1 651 -2 534 1 732 4 206 2 535Operating income 130 478 122 936 103 533 101 733 104 039 98 480 89 663 86 835

Financial income and expenses 6 412 -739 6 953 5 763 -7 808 1 859 4 854 2 988Income after financial items 136 890 122 197 110 485 107 496 96 231 100 339 94 517 89 823

Income taxes -30 091 -27 241 -24 850 -23 347 -21 083 -20 768 -22 688 -21 308Net income 106 799 94 955 85 635 84 149 75 148 79 571 71 829 68 515

Attributable toParent Company’s shareholders 106 705 94 635 85 318 83 997 75 067 79 272 71 361 68 379Non-controlling interests 94 320 317 152 81 299 468 136

Depreciation, amortisation and write-downs -24 762 -23 496 -22 586 -33 434 -16 947 -17 703 -16 607 -16 426

Key ratios per quarter, total GroupJul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar Oct-Dec

2019 2019 2019 2018 2018 2018 2018 2017

Shareholders' equity, attributable to the Parent Company's shareholders, SEK millions 1 724.3 1 600.1 1 593.6 1 492.9 1 407.8 1 342.0 1 328.0 1 225.9Shareholders’ equity per share*, SEK 15.88 14.74 14.68 13.75 12.97 12.36 12.23 11.29Return on equity, % 23.1 22.3 22.2 22.2 22.2 22.5 23.1 23.3Cash flow from operating activities per share*, SEK 1.39 0.95 0.29 1.07 0.79 0.97 0.39 1.01

* Recalculated with regard to the 5:1 share split carried out in May 2018.


Consolidated statements of financial positionSEK thousands Note Sep 30. 2019 Sep 30. 2018 Dec 31. 2018

ASSETS 2Goodwill 6 435 619 421 583 421 611Other intangible fixed assets 6 371 280 238 500 306 386Tangible fixed assets 6 180 580 90 440 94 126Shares and participations 5 746 5 746 5 746Other financial fixed assets 26 668 12 641 17 856Deferred tax assets 2 814 662 1 166Inventories 206 399 156 938 161 186Accounts receivable 242 412 176 778 181 002Current tax assets 2 056 4 432 3 946Other current receivables 6 069 4 815 4 283Prepaid expenses and accrued income 13 688 10 532 9 349Cash and cash equivalents 599 010 496 225 490 810Total assets 2 092 341 1 619 292 1 697 467

SHAREHOLDERS' EQUITY AND LIABILITIES 2Shareholders’ equity, attributable to the Parent Company’s shareholders 1 724 250 1 407 781 1 492 914Non-controlling interests 3 382 3 153 3 298Provisions 15 275 10 718 11 527Deferred tax liabilities 27 034 46 581 29 329Long-term interest-bearing liabilities 64 337 – –Long-term non-interest-bearing liabilities 34 971 30 357 8 124Short-term interest-bearing liabilities 14 175 – –Current tax liabilities 40 679 8 343 27 187Accounts payable 40 517 26 483 32 085Other short-term non-interest-bearing liabilities 16 897 9 673 11 007Accrued expenses and deferred income 110 824 76 203 81 996Total shareholders’ equity and liabilities 2 092 341 1 619 292 1 697 467

Amounts for Tangible fixed assets, Long-term interest-bearing liabilities and Short-term interest-bearing liabilities include, as of September 30, 2019, effect attributable to IFRS

16, which entered into force on January 1, 2019. Refer to note 1 for further information.

Consolidated changes in shareholders' equityAttributable to the Parent Company’s shareholders Non-

controlling interests

Total share-holders´

equitySEK thousands

Share capital Other capital contributed

Reserves Retained earnings

Opening balance January 1, 2018 22 144 494 610 12 567 696 536 2 792 1 228 649Total comprehensive income – – 37 687 309 697 1 137 348 521Dividend (SEK 0.74 per share*) – – – -80 327 – -80 327Dividend to non-controlling interests – – – – -631 -631Closing balance December 31, 2018 22 144 494 610 50 254 925 906 3 298 1 496 212

Opening balance January 1, 2019 22 144 494 610 50 254 925 906 3 298 1 496 212Total comprehensive income – – 36 946 286 658 882 324 486Dividend (SEK 0.85 per share) – – – -92 268 – -92 268Dividend to non-controlling interests – – – – -798 -798Closing balance September 30, 2019 22 144 494 610 87 200 1 120 296 3 382 1 727 632

* Recalculated with regard to the 5:1 share split carried out in May 2018.


Condensed consolidated cash flow statementsJanuary – September July – September Whole year

SEK thousands 2019 2018 2019 2018 2018

Income after financial items 369 572 291 087 136 890 96 231 398 583Adjustment for non-cash items 45 353 53 135 11 137 26 746 80 578Tax paid -78 191 -73 647 -19 024 -22 116 -94 985Change in inventories -36 457 -1 084 -12 545 -1 535 -4 464Change in trade receivables -53 085 -28 512 25 491 -2 294 -33 996Change in trade payables 38 000 -7 743 9 098 -10 739 3 719Cash flow from operating activities 285 192 233 236 151 047 86 293 349 435

Cash flow from investing activities -100 432 -56 567 -5 893 -3 885 -181 265Cash flow from financing activities -92 268 -81 462 – 476 -81 462Cash flow for the period 92 492 95 207 145 154 82 884 86 708

Opening cash and cash equivalents 490 810 395 963 446 548 421 397 395 963Exchange-rate difference in cash and cash equivalents 15 708 5 055 7 308 -8 056 8 139Closing cash and cash equivalents 599 010 496 225 599 010 496 225 490 810

Income statements for the Parent Company

January – September July – September Whole yearSEK thousands 2019 2018 2019 2018 2018

Net sales 10 805 12 327 3 567 4 513 16 104Administrative expenses -17 092 -13 678 -6 803 -3 420 -18 144Other operating revenues – – 27 – –Other operating expenses -8 -29 – -28 -46Operating income -6 295 -1 380 -3 209 1 065 -2 086

Dividends from Group companies 1 856 224 787 – 13 208 362 692Financial income and expenses 7 017 1 041 5 390 -341 1 336Income after financial items 2 578 224 448 2 181 13 932 361 942

Income taxes -1 298 1 -1 596 -169 69Net income 1 280 224 449 585 13 763 362 011

Depreciation and amortisation were charged against income for the period by SEK - thousand (-), of which SEK - thousand (-) for the third quarter.

Balance sheets for the Parent Company SEK thousands Sep 30. 2019 Sep 30. 2018 Dec 31. 2018

ASSETSTangible fixed assets 12 12 12Participations in Group companies 771 346 771 346 771 346Shares and participations 5 746 5 746 5 746Other financial fixed assets 4 942 3 614 3 937Deferred tax assets 1 283 942 1 014Receivables from Group companies 41 388 85 276 48 990Other current receivables 403 – –Prepaid expenses and accrued income 40 321 158Cash and cash equivalents 178 882 51 662 261 749Total assets 1 004 042 918 919 1 092 952

SHAREHOLDERS' EQUITY AND LIABILITIESShareholders’ equity 955 551 908 977 1 046 539Provisions 6 227 4 574 4 921Current tax liabilities 707 231 234Accounts payable 46 120 242Liabilities to Group companies 34 182 – 35 426Other short-term non-interest-bearing liabilities 450 640 506Accrued expenses and deferred income 6 879 4 377 5 084Total shareholders’ equity and liabilities 1 004 042 918 919 1 092 952


Note 1. Accounting Principles

This interim report has been prepared for the Group in accordance with the Annual Accounts Act and IAS 34, Interim Financial Reporting, and for the Parent Company in accordance with the Annual Accounts Act and recom-mendation RFR 2 of the Swedish Financial Reporting Board, Accounting for Legal Entities.

Unless otherwise stated below, the accounting principles applied to the Group and the Parent Company are consistent with the accounting princi-ples used in the presentation of the most recent Annual Report.

As from January 1, 2019, the company applies to IFRS 16 'Leasing agree-ments'. Reporting pursuant to IFRS 16 means that a great part of all leasing agreements are reported in the balance sheet as assets and liabilities. This reporting is based on the view that the lessee has the right to use an asset for a specific period of time and at the same time a liability to pay for this right. The project regarding transition to IFRS 16 has included review of the company's all leasing agreement and interpretation of these agreements with respect to the IFRS 16 principles. Potential options to extend existing lease agreements have been considered and in each individual case it is evaluated however it is likely that an option will be exercised or not.

Vitrolife has chosen to apply the simplified transition approach, meaning that the leasing liability is recorded at the net present value of future leasing fees for the leasing agreements in place as of January 1, 2019. The right-of-use asset is recorded at the same value as the leasing liability as of Janu-ary 1, 2019. The company has also chosen to apply pracitical expedients, where leasing agreements with a term shorter than 12 months and/or with an underlying asset meeting the standards definition of being low-value will not be included in right-of-use asset or leasing liability.

Reporting pursuant to IFRS 16 has meant that the company, as from Janu-ary 1 2019, records a right-of-use asset and a leasing liability to the tune of SEK 79 million each, meaning that the company's equity/assets-ratio decreases by approx. 4 percentage points as of the same date. Since Vit-rolife applies the simplified transition approach, where the initial right-of-use asset is of equal value as the leasing liability, no transition effect has affected equity as of January 1, 2019. Accounting according to IFRS 16 has had a positive impact on the Group’s EBITDA-margin in the third quar-ter of approximately one percentage unit, which is attributable to that leas-ing fees are recorded as depreciation and interest expenses instead.

Explanation to the transition from IAS 17 to IFRS 16, SEK millionCommitments on operational leasing agreements per 31 Dec 2018 47Additional, options to extend 41Less short-term leases -1Less leasing of low-value assets -1Discounting according to marginal borrowing rate -8Leasing liability 1 January 2019 79

Effect on assets and liabilities, 1 January 2019

SEK thousands Balance 1 January

2019

Recalculation according to

IFRS 16

Recalculated balance

1 January 2019

AssetsTangible assets 94 126 78 617 172 743

LiabilitiesShort-term interest bearing liabilities – 10 400 10 400Long-term interest bearing liabilities – 68 217 68 217Total – 78 617 78 617

Above summary of effects on assets and liabilities includes only items that have had an impact from the standard's entry to force.

The Parent company applies to the exception rule in RFR 2, which means that a legal entity does not have to apply to IFRS 16. No other standards, amendments or interpretations that have come into force in 2019 are expected to have any material impact on the Group.

Note 2. Financial instruments - Fair valueFair value has been measured for all financial assets and liabilities pursuantto IFRS 13. Other financial fixed assets, accounts receivable, other cur-rent receivables, cash and cash equivalents, accounts payable, other liabili-ties and interest bearing liabilities are recorded at amortised cost. Financial assets and liabilities measured at amortised cost amount to SEK 868,677 thousand (685,684) and SEK 83,810 thousand (38,133). For the Group's other financial assets and financial liabilities, the reported values are con-sidered to be a good approximation of the fair values. A calculation of fair value based on discounted future cash flows, where a discount rate reflect-ing the counterparty's credit risk constitutes the most significant input, is not deemed to give any significant difference compared to the reported value.

Classified in level 3 are financial assets, which relate to unlisted shares, and have been valued based on latest material transactions. Hence, fair value is estimated to be equal to book value. Classified in level 3 are also liabilities which relate to additional purchase prices, for which fair value have been estimated in cases where the time for effectiveness can be determined with certainty and the effect on Group level is material. Calculation is per-fomed by future expected payments being discounted by current market rates for the duration of the liability. The measurement of fair value for finan-cial liabilities in level 3 has during the period generated an effect on the income statement of SEK -392 thousand (-354), of which SEK -95 thou-sand (-177) during the third quarter. This effect is reported among financial items.

Fair value hierarchy

SEK thousandsFair value

levels Sep 30.2019 Sep 30.2018 Dec 31.2018

Financial assets Financial assets to fair value through income statement 3 5 746 5 746 5 746Total Financial assets 5 746 5 746 5 746

Financial liabilitiesFinancial liabilities to fair value through income statement 3 9 327 30 357 8 124Total Financial liabilities 9 327 30 357 8 124

Level 1: valued at fair value based on quoted prices on an active market for identical assets. Level 2: valued at fair value based on other observable inputs for assets and liabilities than quoted price included in level 1. Level 3: valued at fair value based on inputs for assets and liabilities unobservable to the market.

Note 3. Pledged assets and contingent liabilitiesSEK thousands Sep 30.2019 Sep 30.2018 Dec 31.2018

GroupPledged assets 30 256 26 002 27 058Contingent liabilities 1 876 1 497 769

Parent companyPledged assets 8 042 6 714 7 037Contingent liabilities 6 393 562 123

Pledged assets pertain to floating charges for own commitments and collateral pledged for endow-ment insurance plans (cost). Contingent liabilities refer to guarantee to Swedish Customs, the dif-ference between market value and book value for endowment insurance plans and parent company guarantees for subsidiaries.

Note 4. Business combinationsOn May 10, 2019, Vitrolife acquired the business of Parallabs Ltd (cor-porate identity number 05155001, based in Hertfordshire, UK), the com-pany's distributor in UK and Ireland for Embryoscope time-lapse systems. The initial purchase price amounted to SEK 23.8 million (GBP 1.9 million). The purchase price was paid in cash and was financed by available cash balances. In addition to the initial purchase price, total additional purchase price of SEK 6.3 million (GBP 0.5 million) may be paid in relation to sales targets during the years 2019-2021. Vitrolife considers it likely that the additional purchase price will fall out and thus the purchase price analysis


Note 6. Segments

Vitrolife consists of five business units whose products are sold by four geographic market organisations. From 2019 the business unit Genomics is added. As a result of the internal organisation, Vitrolife reports net sales and market contribution per geographic segment. Market contribution is defined as gross income reduced with the selling expenses per market. The balance sheet is not followed up per segment.

EMEA North- and South America Japan and Pacific Asia Total

SEK thousandsJan-Sep

2019Jan-Sep

2018Jan-Sep

2019Jan-Sep

2018Jan-Sep

2019Jan-Sep

2018Jan-Sep

2019Jan-Sep

2018Jan-Sep

2019Jan-Sep

2018

Net sales 429 059 366 964 197 942 122 002 169 822 126 693 273 824 215 576 1 070 646 831 235Gross income 268 132 235 083 116 276 81 842 119 577 90 434 182 179 139 342 686 164 546 701Selling expenses -69 792 -59 710 -34 050 -23 864 -30 888 -24 435 -34 748 -25 068 -169 476 -133 077Market contribution 198 341 175 373 82 226 57 978 88 689 65 999 147 431 114 274 516 687 413 624

Fixed assets* 859 819 657 653 120 911 92 041 5 772 829 977 – 987 479 750 523

EMEA North- and South America Japan and Pacific Asia Total

SEK thousandsJul-Sep

2019Jul-Sep

2018Jul-Sep

2019Jul-Sep

2018Jul-Sep

2019Jul-Sep

2018Jul-Sep

2019Jul-Sep

2018Jul-Sep

2019Jul-Sep

2018

Net sales 147 018 113 401 70 604 48 544 71 143 38 483 89 227 83 582 377 991 284 010Gross income 89 970 72 624 42 285 33 761 51 014 27 726 60 080 53 746 243 349 187 857Selling expenses -21 872 -17 395 -10 773 -8 911 -12 977 -9 388 -10 476 -8 595 -56 097 -44 289Market contribution 68 099 55 229 31 512 24 850 38 037 18 338 49 604 45 151 187 252 143 568

Fixed assets* 859 819 657 653 120 911 92 041 5 772 829 977 – 987 479 750 523

EMEA North- and

South AmericaJapan and

PacificAsia Total

SEK thousandsWhole year

2018Whole year

2018Whole year

2018Whole year

2018Whole year

2018

Net sales 511 211 173 482 169 304 297 351 1 151 348Gross income 334 754 114 686 119 838 191 846 761 124Selling expenses -82 785 -34 094 -33 421 -34 237 -184 537Market contribution 251 969 80 592 86 417 157 609 576 587

Fixed assets* 725 054 95 750 1 314 5 822 123

* Fixed assets refer to intangible and tangible fixed assets, i.e. excluding financial instruments and deferred tax assets.

has been based on a total purchase price of SEK 30.1 million (GBP 2.4 million). The acquisition constitutes a business combination in accordance with IFRS 3 and is expected to be accretive to group revenue of approxi-mately GBP 1 million for a twelve-month period and marginally accretive on the Group's EBITDA. Acquired assets and liabilities consist mainly of cus-tomer relationships of SEK 27.8 million (GBP 2.2 million), financial receiva-bles of SEK 7.0 million (GBP 0.6 million) and deferred tax liability of SEK -5.3 million (GBP -0.4 million).

Note 5. RevenueThe great majority of Vitrolife’s sales are of products that clearly represent separate performance obligations. Sales of products are recorded as rev-enue when they have been delivered to the customer. Vitrolife also sells ser-vices in the form of the servicing of products, primarily in the Time-lapse business unit, and also in the form of the recharging of freight. Servicing is largely invoiced in advance and is recorded as revenue during the course of the servicing contract. Servicing revenues not recognised as revenue are reported as deferred income (contractual liabilities) in the balance sheet. In Vitrolife’s assessment these services are also clearly separate performance obligations. The table below presents the division of products and services in net sales.

Vitrolife categorises its products and services into the following busi-ness units: Media, Time-lapse, Disposable Devices, Genomics and ART Equipment, where business unit Genomics is added from 2019. Those sales that are not categorised into any of these business units are essen-tially freight. As regards segment reporting, Vitrolife applies the follow-ing geographic segments: EMEA, North- and South America, Japan and Pacific and Asia. The division of revenue per business unit and segment is

presented in the tables below. For more information on the company’s seg-ments, see note 6.

Net sales per geographic segment

SEK millionsJan-Sep

2019Jan-Sep

2018Jul-Sep

2019Jul-Sep

2018Whole year

2018

EMEA 429 367 147 114 511of which Sweden 13 13 3 2 22North- and South America 198 122 71 48 173Japan and Pacific 170 127 71 39 169Asia 274 215 89 83 297Total 1 071 831 378 284 1 151

Net sales per business unit

SEK millionsJan-Sep

2019Jan-Sep

2018Jul-Sep

2019Jul-Sep

2018Whole year

2018

Media 493 450 162 156 606Disposable Devices 133 118 46 39 167Time-lapse 287 202 108 69 297Genomics 91 – 37 – –ART Equipment 46 43 19 14 58Other 21 18 7 6 24Total 1 071 831 378 284 1 151

Net sales per products and services

SEK millionsJan-Sep

2019Jan-Sep

2018Jul-Sep

2019Jul-Sep

2018Whole year

2018

Products 1 009 780 357 266 1 081Services 62 51 21 18 70Total 1 071 831 378 284 1 151


Reconciliation of alternative key figures

This report includes certain key ratios not defined in IFRS, but they are included in the report as company management considers that this infor-mation makes it easier for investors to analyze the Group’s financial per-formance and position. Investors should regard these alternative key ratios as complementing rather than replacing financial information in accordance with IFRS. Please note that Vitrolife’s definitions of these key ratios may dif-fer from other companies’ definitions of the same terms. Basis for calcula-tion of financial information for rolling 12 month is found in sections con-solidated income statements per quarter and key ratios per quarter, total Group.

Adjusted gross and operating incomeAs Vitrolife’s gross and operating income is significantly impacted by the amortisation of surplus values related to the acquisitions that the com-pany has carried out, it is management’s assessment that it is appropriate to illustrate the Group’s profitability and earning capacity by presenting gross and operating income adjusted for amortisation of these surplus val-ues. Reconciliation of these figures are presented directly in the financial reports. Vitrolife also reports adjusted gross and operating margin, which are defined as the above mentioned income measures in relation to net sales.

Operating income before depreciation and amortisation (EBITDA)As amortisation of surplus values related to the acquisitions that Vitrolife has carried out is charged against operating income, it is management’s assessment that operating income before depreciation and amortisation (EBITDA) is a fairer measure of the Group’s earning capacity compared to operating income (EBIT). Vitrolife’s Board aims to achieve growth while maintaining profitability, where profitability is followed up through operat-ing income before depreciation and amortisation (EBITDA). The compara-tive figures in the table have not been recalculated after the transition to IFRS 16.

January-September July-September Whole year

SEK millions 2019 2018 2019 2018 2018

Operating income 356.9 292.2 130.5 104.0 393.9Depreciation and amortisation

70.8 51.3 24.8 16.9 84.7

Operating income before depreciation and amortisation (EBITDA)

427.8 343.4 155.2 121.0 478.6

Return on equityIt is Vitrolife’s assessment that return on equity is an appropriate measure to illustrate to stakeholders how well the Group invests its equity.

SEK millionsSep 30.

2019Sep 30.

2018Dec 31.

2018

Average shareholders' equity, rolling 12 month 1 602.7 1 325.9 1 392.7Net income, rolling 12 month 370.7 294.1 309.7Return on equity, % 23.1 22.2 22.2

Net debt / Rolling 12 month EBITDAOne of Vitrolife’s financial objectives is to have a strong financial capital base to enable continued high growth, both organic and through acqui-sitions. In relation to this, Group management follows up the ratio of net debt in relation to rolling 12-month operating income before depreciation and amortisation (EBITDA). According to Vitrolife’s financial objectives, this ratio should normally not exceed three times. Management assesses that this ratio gives creditors and investors important information concerning the Group’s attitude to debt. In conjunction to the entry into force of IFRS 16 on January 1, 2019, the key ratio definition has been reformulated as financial liabilities related to leas-ing agreements are not included in the calculation of the net debt.

SEK millionsSep 30.

2019Sep 30.

2018Dec 31.

2018

Long-term interest-bearing liabilities 64.3 – –Short-term interest-bearing liabilities 14.2 – –Adjustment of interest-bearing liabilities related to leasing agreements -78.5 – –Cash and cash equivalents -599.0 -496.2 -490.8Net debt -599.0 -496.2 -490.8

SEK millionsSep 30.

2019Sep 30.

2018Dec 31.

2018

Net debt -599.0 -496.2 -490.8

Operating profit, rolling 12 month 458.7 379.0 393.9Depreciation and amortisation, rolling 12 month 104.3 67.7 84.7Rolling 12 month EBITDA 563.0 446.7 478.6

Net debt / Rolling 12 month EBITDA -1.1 -1.1 -1.0


Net sales growth in local currencyAs a large part of Vitrolife’s sales are in other currencies than the reporting currency of SEK, sales are not only impacted by actual growth, but also by cur-rency effects. To analyse sales adjusted for currency effects, the key ratio of sales growth in local currency is used. The percentage effects in the following tables are calculated by each amount in SEK millions in relation to net sales in the same period previous year (which is presented in note 5).

Net sales per geographic segmentEMEA North and South America Japan and Pacific Asia

Jan-Sep2019

Jul-Sep2019

Jan-Sep2019

Jul-Sep2019

Jan-Sep2019

Jul-Sep2019

Jan-Sep2019

Jul-Sep2019

Growth in local currency, SEK M 47 29 61 17 31 26 47 3Growth in local currency, % 13 26 49 35 25 69 23 4Currency effects, SEK M 15 5 15 5 12 7 11 3Currency effects, % 4 3 14 10 9 16 4 3Total growth, SEK M 62 34 76 22 43 33 58 6Total growth, % 17 30 62 45 34 85 27 7

Net sales per business unitMedia Disposable Devices Time-lapse Genomics ART Equipment

Jan-Sep2019

Jul-Sep2019

Jan-Sep2019

Jul-Sep2019

Jan-Sep2019

Jul-Sep2019

Jan-Sep2019

Jul-Sep2019

Jan-Sep2019

Jul-Sep2019

Growth in local currency, SEK M 24 1 7 4 67 30 85 34 1 4Growth in local currency, % 6 1 6 11 34 45 n/a n/a 2 35Currency effects, SEK M 19 5 8 3 18 8 6 3 2 1Currency effects, % 4 3 7 6 8 11 n/a n/a 4 4Total growth, SEK M 44 6 15 7 85 39 91 37 3 5Total growth, % 10 4 13 17 42 56 n/a n/a 6 39

Group totalJan-Sep

2019Jan-Sep

2018Jul-Sep

2019Jul-Sep

2018Whole year

2018

Organic growth in local currency, SEK M 101 24 40 17 58Organic growth in local currency, % 12 3 15 7 5Acquired growth, SEK M 85 – 34 – –Acquired growth, % 11 – 12 – –Currency effects, SEK M 54 32 20 21 47Currency effects, % 6 4 6 8 5Total growth, SEK M 239 56 94 38 105Total growth, % 29 7 33 15 10


Definitions

Glossary

Adjusted gross incomeGross income before amortisation of acquisition-related intangible assets.

Adjusted operating incomeOperating income before amortisation of acquisition-related intangible assets.

Cash flow from operating activities per shareThe cash flow from operating activities for the period in relation to the average number of outstanding shares for the period.

Earnings per shareIncome for the period in relation to the average number of outstanding shares for the period.

Equity/assets ratioShareholders’ equity and non-controlling interests as a percentage of total assets.

Gross marginGross income as a percentage of net sales for the period. Market contributionGross income reduced with the sel-ling expenses per market.

Net debtInterest-bearing liabilities (excluding financial liabilities related to leasing agreements) minus interest-bearing receivables minus cash and cash equivalents.

Net debt / Rolling 12 month EBITDA Net debt in relation to rolling 12 months operating income before amortisation and depreciation (EBITDA).

Operating margin before depreciation and amortisation (EBITDA)Operating income before deprecia-tion and amortisation as a percen-tage of net sales for the period.

Operating marginOperating income as a percentage of net sales for the period.

Profit marginIncome for the period as a percen-tage of net sales for the period.

Return on equity Rolling 12 months net income as a percentage of the average sharehol-ders’ equity for the same period.

Shareholders’ equity per shareShareholders’ equity in relation to the number of shares outstanding at closing day.

The following explanations are inten-ded to help the reader to understand certain specific terms and expressions in Vitrolife’s reports:

Biological quality testsUsing biological systems (living cells, organs or animals) to test how well a product or input material functions in relation to a requirement specification.

BiopsyRemoval of one or several cells from living tissue for diagnostic evaluation.

BiotechnologyCombination of biology and technology, which primarily means using cells or components from cells (such as enzymes or DNA) in technical applications.

BlastocystAn embryo at days 5-7 after fertiliza-tion. Cell division has gone so far that the first cell differentiation has taken place and the embryo thereby now has two different types of cells.

Cell therapyDescribes the process when new cells are added to tissue in order to treat a disorder.

Clinical study/trialAn investigation in healthy or sick people in order to study the effect of a pharmaceutical or treatment method.

EmbryoA fertilized and cell divided egg.

In vitro (Latin “in glass”)A process that has been taken out from a cell to take place in an artificial environment instead, for example in a test tube.

In vivoBiological processes in living cells and tissue when they are in their natural place in whole organisms.

IncubatorEquipment for culture of embryos in a controlled environment.

IUIIntra-Uterine Insemination, “artificial insemination”. A high concentration of active sperms is injected in order to increase the chance of pregnancy.

IVF, In Vitro FertilizationFertilization between the woman’s and the man’s sex cells and cultivation of embryos outside the body.

Medical devicesComprise devices used to make a diagnosis of a disease, treat a disease and as rehabilitation.

PGT-APreimplantation genetic testing for aneuploidy (PGT-A), also called preimplantation genetic screening (PGS), is a test for chromosome copy number that can be used during IVF to help determine the chromosomal status of an embryo from a biopsy of one or more cells. The results of PGT-A aid in the selection of an embryo likely to have a normal number of chromosomes (euploid) for transfer to the woman and help avoid those with abnormal copy number (aneu-ploid) that may result in IVF failure or miscarriage.

PGT-MPreimplantation genetic testing for monogenic and single gene defects (PGT-M), also called preimplantation genetic diagnosis (PGD), is a test to find specific hereditary genetic diseases that are caused by a single defective gene. This test is used for couples who have a genetic mutation that can cause a genetic disease where the couple want to be sure that their child will not carry this disease.

Preclinical studyResearch that is done before a pharmaceutical or a treatment method is sufficiently documented to be studied in people, for example testing of substances on tissue samples and later testing on experimental animals.

Time-lapseTechnology for supervision of embryos. Pictures of the development of the embryo are taken in short time interval, then played as a film and analyzed.

VitrificationProcess for converting a material to a glasslike solid state, for example through rapid freezing, in this case rapid freezing of eggs and embryos, in order to be able to carry out IVF on a later occasion.

www.vitrolife.com

Vitrolife AB (publ)Vitrolife Sweden ABBox 9080SE-400 92 GöteborgSwedenTel +46 31 721 80 00Fax +46 31 721 80 99

A.T.S. SrlVia Pistrucci, 26IT-20137 MilanoItalyTel +39 2 541 22100Fax +39 2 541 22100

HertArt ApSKorskildelund 6DK-2670 GreveDenmarkTel +46 31 721 80 15Fax +46 31 721 80 99

Vitrolife A/SJens Juuls Vej 20 DK-8260 Viby JDenmarkTel +45 7221 7900 Fax +45 7221 7901

Vitrolife BVBAZwaluwstraat 113BE-1840 LonderzeelBelgiumTel +32 2588 2468Fax +32 2588 2469

Vitrolife GmbHDr.-Pauling-Str. 9DE-84079 BruckbergGermanyTel +49 8765 939 900 Fax +49 8765 939 9070

Vitrolife, Inc.3601 South Inca Street Englewood , CO 80110USATel +1 303 762 1933Fax +1 303 781 5615

6835 Flanders DriveSuite 500San Diego, CA 92121USATel +1 858 824 0888Fax +1 858 824 0891

Vitrolife K.K.Ryuen Building 2F1-3-1 Shibakoen, Minato-kuTokyo 105-0011JapanTel +81 3 6459 4437Fax +81 3 6459 4539

Vitrolife Ltd.1 Chapel StreetWarwickCV34 4HLUKTel +44 800 032 0013Fax +44 800 032 0014

Vitrolife Pty Ltd.Level 10, 68 Pitt StreetSydney, NSW 2000AustraliaTel +61 3 8844 4878Fax +61 3 8844 4879

Vitrolife SAS43 Rue de LiègeFR-75 008 ParisFranceTel +33 1 82 880 860 Fax +33 1 82 880 855

Vitrolife Sweden ABBeijing Representative OfficeA-2005 Focus SquareNo. 6 Futong East AvenueChaoyang DistrictBeijing, 100102ChinaTel +86 010 6403 6613Fax +86 010 6403 6613

Vitrolife (Beijing) Technical Service Co. Ltd. A-2006 Focus SquareNo. 6 Futong East AvenueChaoyang DistrictBeijing, 100102ChinaTel +86 010 6403 6613Fax +86 010 6403 6613

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